U.S. Session Forex Recap – Nov. 19, 2015

  • FOMC minutes: Conditions for Dec liftoff “may well be” met
  • Fed officials and staff discussed low equilibrium real interest rates
  • U.S. building permits up from 1.11M to 1.15M in October
  • U.S. crude oil inventories down from 4.2M to 0.5M barrels
  • NZ PPI input up by 1.6% vs. 0.1% expected in Q3
  • NZ PPI output up by 1.3% vs. 0.2% consensus in Q3

Buy the rumor, sell the news! The FOMC minutes pretty much confirmed that a December liftoff is in the cards, but the Greenback retreated against its forex peers when profit-taking took place.

Major Events:

FOMC minutes – All systems go for a December liftoff? Almost. FOMC policymakers sounded more hawkish in their latest huddle, citing that the U.S. economy may be able to meet the conditions required for a rate hike in their next meeting. Fed officials noted that downside risks have subsided, as Uncle Sam’s financial markets didn’t seem to be too bothered by the global stock market rout earlier this year.

The rest of their discussions zoomed in on the trajectory of succeeding rate hikes, which head honcho Janet Yellen has repeatedly projected to be a gradual one. Now it’s up to the U.S. economy to keep printing good data to keep rate hike expectations in play.

Another oil price bounce – The U.S. crude oil inventories report showed a supply reduction from 4.2 million barrels to 0.5 million barrels, adding further support to prices. This followed news that U.S. airstrikes in ISIS-controlled areas near oil fields might wind up restricting supply. Yay for the Loonie!

New Zealand quarterly PPI – New Zealand boasted of stronger than expected quarterly PPI readings, with input prices up by 1.6% versus the estimated 0.1% uptick and output prices up by 1.3% versus the projected 0.2% gain. This also represented a strong rebound over the previous quarter’s 0.2% and 0.3% declines respectively.

Components of the report indicated that the rise was spurred by higher meat and milk prices, as the dairy industry rebound occurred around Q3, and hasn’t indicated the recent slump into account.

Major Currency Movers:

USD – Surprisingly, even with all the strong hints supporting a Fed liftoff in December, the U.S. dollar wound up returning some of its gains to its forex rivals. Then again, market watchers have been pricing in these expectations for quite some time already.

USD/JPY dipped to a low of 123.34 after the FOMC minutes were printed and is back up to 123.60 (-0.01%), EUR/USD fell to a low of 1.0613 then recovered to 1.0660 (+0.03%), and GBP/USD is still flat just above the 1.5200 handle.

CAD – The Loonie went on a stronger rally, thanks to easing fears of rising oil stockpiles. WTI crude oil made another bounce off the $40/barrel level while Brent crude oil is still holding on to the $44/barrel mark.

USD/CAD found resistance at 1.3350 and is down to the 1.3300 area once more (-0.01%), CAD/JPY surged from an intraday low of 92.31 to a high of 92.94 (+0.03%), EUR/CAD is making another attempt to break below the 1.4200 level (-0.07%), and GBP/CAD fell upon hitting the ceiling at 2.0300 (-0.08%).

Watch Out For:

  • BOJ interest rate statement and press conference
  • Japanese trade balance at 12:50 am GMT (-0.36T JPY previous, -0.38T JPY expected)
  • Japanese all industries activity index at 5:30 am GMT (-0.2% previous, +0.2% expected)

See more:

Asian Session Recap

London Session Recap

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